GENEVA — U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer began talks Saturday with Chinese Vice Premier He Lifeng in Geneva, in a bid to de-escalate a deepening trade dispute that threatens global markets and bilateral commerce between the world’s two largest economies.

China’s state-run Xinhua News Agency confirmed the start of the talks, while diplomatic sources said the delegations met for about two hours before heading to a private luncheon.

The exact location of the meeting was not disclosed, though a motorcade was seen leaving the residence of the Swiss Ambassador to the United Nations.

The high-stakes dialogue comes as tariffs between the U.S. and China have climbed to punitive levels, disrupting trade valued at over $660 billion last year.

Last month, U.S. President Donald Trump raised tariffs on Chinese goods to as high as 145%, prompting Beijing to retaliate with levies of up to 125% on American imports.

Trump has hinted at the possibility of reducing tariffs, writing on Truth Social Friday: “80% Tariff seems right! Up to Scott.”

Despite widespread skepticism about a breakthrough, there is cautious optimism that even a limited reduction in tariffs could signal progress.

“The best scenario is for the two sides to agree to de-escalate... even a small reduction would send a positive signal,” said Sun Yun, director of the China program at the Stimson Center.

The Geneva meeting marks the first direct talks between He Lifeng and Bessent since Trump returned to the White House in January.

Trump has used tariffs aggressively as a trade tool, including a 10% duty on imports from nearly all countries and a 20% surcharge on China related to fentanyl trafficking.

A broader 125% levy stems from unresolved issues dating back to Trump’s first term, including U.S. accusations that China forces foreign firms to share trade secrets, subsidizes domestic tech industries unfairly, and engages in IP theft.

In January 2020, the two nations signed a Phase One trade agreement, with China pledging to increase purchases of American goods in exchange for suspended tariff hikes.

However, the agreement faltered amid the COVID-19 pandemic and mounting tensions over technology and supply chains.

The talks in Geneva are seen as a potential step toward resuming stalled negotiations on these unresolved issues, including subsidies, forced technology transfers, and market access.

In addition to the Chinese delegation, Bessent and Greer are also scheduled to meet Swiss President Karin Keller-Sutter. Switzerland, a major trading partner of both the U.S. and China, has called for restraint amid fears of collateral economic damage.

Trump last month suspended a planned 31% tariff on Swiss exports, reducing the rate temporarily to 10%. Swiss officials warned of potential impacts on key industries including watches, coffee capsules, cheese, and chocolate.

“The government is not planning to impose countermeasures at the present time,” the Swiss government said in a statement last week, while acknowledging that increased tariffs would affect import prices and domestic industry.

The U.S. is Switzerland’s second-largest trading partner after the European Union, with bilateral trade in goods and services quadrupling over the past two decades. Switzerland eliminated all industrial tariffs on Jan. 1, 2024, meaning nearly all U.S. goods can enter the country duty-free.

Further meetings in Geneva are expected to continue through the weekend, though no joint statement had been issued by late Saturday. — Agencies